The Importance of Income Diversification for Crypto Traders

[AmoreJaz]

If you are able to learn well and have knowledge about crypto trading, you defend on it because many people are depending on it to live as they have no alternative.
Although, it will be very good if you have physical business as backup, but it also involves risk which is a bit lesser than the crypto trading, but if you have the knowledge, make it your main source and you will earn from trading if you are not greedy.

Having knowledge is of course very important to be able to get a good income from trading, because it is impossible to get good results in trading without good knowledge about trading and if we choose to persist in trading because it is difficult to get income from other sources. Another thing, of course, is that we have to have good knowledge about trading so that we can continue to make profits from trading and when we can get profits, it would be better if we used these profits to try a physical business, which of course we can master this well so that we can run it. Of course, greed is very detrimental to us in trading, so it is important for us to be able to control our emotions when trading so as not to be greedy.

If you are exploring different projects when it comes to trading, then, it is like you need to learn everyday. As each project is unique from each other, you need to understand what's going on with their actual developments so you know how to attack in the trading market.

Trading is one tedious job. So if you are not emotionally and financially prepared, better not put your hard-earned money into this activity. Maybe, look for other tangible assets to invest with if you have no luxury of time on your plate.

[Peanutswar]

Since the retracement of Bitcoin, the market has become boring. Sometimes, the direction of Bitcoin is unclear. For example, the price action of Bitcoin is actually confusing. I have learned one thing in these recent days: As a crypto trader, do not rely on trading as your only source of income. It is good to have another source of income like real estate, staking, crypto jobs, mining,  and other legitimate sources of income. If I say that I will force trade now, it can end up in a loss.

The market will not become healthy if there's no retracement this is to check where the market can hold and soar if you are active in trading with the use of the indicators and signals even though it's not giving a hundred percent price movement still there's a glimpse you can see what are the possible price action, that's why knowing with technical analysis might save you from loss and lessen the risk.
Having different jobs is ideal to make sure you will grab the opportunity in crypto like buying the dips and holding wait for the ATH but recently there are a lot of trend right now in the crypto space that offer a job so you can enjoy crypto while earning.

[JeffBrad12]

Diversification assets into multiple baskets ideally sounds like picking fruit from many trees but is not as easy and sweet as expected. Some assets are no longer capable of price reversals, some assets are only good if they are hyped, and all of them will pose a greater risk of loss when losing interest in the market. I'm not the kind of person who likes to divide treasures into parts, as you said, it would just be a pile of useless trash.

yeah, diversification isn't all rainbow and adhere to our expectation, most people that over diversify usually are the amateur and beginner who thinks diversifying into more shitcoin means less risk, well the bad news is, that's not true, just packing various shitcoin doesn't magically turn it into blue chip coin.

in my book, diversification only work if I want to invest and mantain risk, but also want to try investing into high risk coin some time, then it works, other than that, just a waste of time since BTC perform better than majority of other coin anyway, no point diversifying. this even more apparent when most of coin also just simply follow BTC price like you can diversify to other 5 top coin and the result more likely will be the same as holding just BTC  .

just compare BTC graph below


to ETH, BNB and SOL

almost looks identical

[fuguebtc]

Diversification assets into multiple baskets ideally sounds like picking fruit from many trees but is not as easy and sweet as expected. Some assets are no longer capable of price reversals, some assets are only good if they are hyped, and all of them will pose a greater risk of loss when losing interest in the market. I'm not the kind of person who likes to divide treasures into parts, as you said, it would just be a pile of useless trash.

yeah, diversification isn't all rainbow and adhere to our expectation, most people that over diversify usually are the amateur and beginner who thinks diversifying into more shitcoin means less risk, well the bad news is, that's not true, just packing various shitcoin doesn't magically turn it into blue chip coin.

in my book, diversification only work if I want to invest and mantain risk, but also want to try investing into high risk coin some time, then it works, other than that, just a waste of time since BTC perform better than majority of other coin anyway, no point diversifying. this even more apparent when most of coin also just simply follow BTC price like you can diversify to other 5 top coin and the result more likely will be the same as holding just BTC  .

What if your only asset is bitcoin or any other blue chip coin and we are in a bear market? Why do we keep locking ourselves into the crypto industry and thinking that diversification means investing in a few altcoins? Why don't we divide our capital and invest in assets such as stocks, gold or businesses? Isn't that diversification?

People just follow the cryptocurrency market and say that diversification is useless, while the concept of diversification is most true when we invest in unrelated assets. You put all your assets in the cryptocurrency market and if it crashes, you lose everything. So I wouldn't call it diversification.

[$weetne$$]

in my book, diversification only work if I want to invest and mantain risk, but also want to try investing into high risk coin some time, then it works, other than that, just a waste of time since BTC perform better than majority of other coin anyway, no point diversifying. this even more apparent when most of coin also just simply follow BTC price like you can diversify to other 5 top coin and the result more likely will be the same as holding just BTC  .

Why alot of individuals prefer to invest in altcoins as a way of diversifying is as they see they can make more profits when they invest in altcoins. They do not forget to invest in Bitcoin but diversify with altcoins. $500 invested in an altcoin can give you more profit than when you invest that same $500 in Bitcoin. Investing in fundamental altcoins that is the secret and not investing in random shitcoin or memecoins. All cryptocurrency moves alike but they do not give them same profit. Bitcoin can increase by 100% but altcoins will increase by 500% percent during the same time because they have low market capitalization and a lot of investors are looking for altcoins that can give them profits to invest into. They do not mind if they lose on various attempts when they can finally get a big profits at the end.

[RockBell]

Why alot of individuals prefer to invest in altcoins as a way of diversifying is as they see they can make more profits when they invest in altcoins. They do not forget to invest in Bitcoin but diversify with altcoins. $500 invested in an altcoin can give you more profit than when you invest that same $500 in Bitcoin. Investing in fundamental altcoins that is the secret and not investing in random shitcoin or memecoins. All cryptocurrency moves alike but they do not give them same profit. Bitcoin can increase by 100% but altcoins will increase by 500% percent during the same time because they have low market capitalization and a lot of investors are looking for altcoins that can give them profits to invest into. They do not mind if they lose on various attempts when they can finally get a big profits at the end.

The money you invest with determines the return you will earn that is the number one rule when investing in bitcoin. The sooner people grasp how bitcoin works, the better because not everyone understands this simple theory. The earlier you learn how bitcoin works, the better. Because, according to the basic analogy you provided, investing $500 amounts to nothing when investing in bitcoin, but this $500 is invested in something with a higher chance of profit than investing in bitcoin. The only reason they will advice you to invest in bitcoin is because it is safer to invest because your money will be in good hands, compare to other altcoins that can crash due to the condition of the market, only few projects can survive, but if you want to take risk then you can actually give altcoin a trail.

[tygeade]

The market will not become healthy if there's no retracement this is to check where the market can hold and soar if you are active in trading with the use of the indicators and signals even though it's not giving a hundred percent price movement still there's a glimpse you can see what are the possible price action, that's why knowing with technical analysis might save you from loss and lessen the risk.
Having different jobs is ideal to make sure you will grab the opportunity in crypto like buying the dips and holding wait for the ATH but recently there are a lot of trend right now in the crypto space that offer a job so you can enjoy crypto while earning.

Retracement or basically a correction to what we are having right now, the reality is that we do not "need" it, it is not bad when it happens and anyone who knows the market will know that it happens here and there, so it is not a big deal at all. But it is not a must at all, we can have a growth without a retracement as well, it doesn't really considered to be something all that troubling.

We need to consider how things aren't always what they look like, sometimes it can look one way and be something else, so we need to be careful about it, so I agree that technical analysis could be the most important key factor here, if you know TA then you are not going to act like everyone in the market, you are going to be confident and seeing what could be done and what is the real situation and could make moves based on that.

[TheUltraElite]

I always advice newbies to keep bitcoin as a side hustle, continue their day job or get one if they are still a student and just newly entering crypto.

Keeping the traditional assets at hand is no harm but only better. Crypto trading was easier for me to cope up with because I had a background of stocks and this can help former stock investors to enter crypto too.

Diversifying is never a bad thing but altcoins should be avoided, in other words, the only crypto in the folio should be bitcoin.

Again it does not mean things other than trading should be given importance to - staking is not something I advice, neither is mining unless you have very cheap electricity and have the rigs in place.

[EarnOnVictor]

Since the retracement of Bitcoin, the market has become boring. Sometimes, the direction of Bitcoin is unclear. For example, the price action of Bitcoin is actually confusing. I have learned one thing in these recent days: As a crypto trader, do not rely on trading as your only source of income. It is good to have another source of income like real estate, staking, crypto jobs, mining,  and other legitimate sources of income. If I say that I will force trade now, it can end up in a loss.

What is your take on this?

There is no other take that will be reasonable against investment diversification and it's only a fool that will argue otherwise. It is like having the factors of safety, I've never seen the disadvantage of that. However, you have to learn and fully know what you are committing your money to and not just dabble into it because you know people are doing it, fraud and losses are in all investments. Nevertheless, it sounds like a good plan if you can divide your money into about 5-10 uneven parts and invest them wisely in projects, businesses and properties.

If you noticed, I mentioned the "uneven parts," this is because what you are investing the money into will always have its encouraging and discouraging parts, so we should learn the level of risk and the plausibility of dealing with them and earning from them. This is what will help you to know the worth of the portion you are coming into each of them. Even as lousy as people are about crypto, wise investors recently warned that you should not invest more than 10% of your worth (affordability). That is the worst case because it is still a new project that people are hyping. You can invest more in the more feasible ones like stocks, indices and properties that will hardly fail you.

[Adbitco]

If you noticed, I mentioned the "uneven parts," this is because what you are investing the money into will always have its encouraging and discouraging parts, so we should learn the level of risk and the plausibility of dealing with them and earning from them. This is what will help you to know the worth of the portion you are coming into each of them. Even as lousy as people are about crypto, wise investors recently warned that you should not invest more than 10% of your worth (affordability). That is the worst case because it is still a new project that people are hyping. You can invest more in the more feasible ones like stocks, indices and properties that will hardly fail you.

When people made mention of percentage to allocate in anything that has to do with luck or probability it seems so crazy and sound so weird because of allocating a little fraction to what you seems can't be reliable. There is always a reason why most people keeps saying that people should used not above 10 percent of their income because if that is Lost it could be very to forget about it than using a life savings or their whole salary to invest or trading volatile currencies.

[wxa7115]

I always advice newbies to keep bitcoin as a side hustle, continue their day job or get one if they are still a student and just newly entering crypto.

Keeping the traditional assets at hand is no harm but only better. Crypto trading was easier for me to cope up with because I had a background of stocks and this can help former stock investors to enter crypto too.

Diversifying is never a bad thing but altcoins should be avoided, in other words, the only crypto in the folio should be bitcoin.

Again it does not mean things other than trading should be given importance to - staking is not something I advice, neither is mining unless you have very cheap electricity and have the rigs in place.

One of the main issues with those that enter this market for the first time is that they want to do many things at the same time, when instead they should take it easy and take a more relaxed approach.

So investing only on bitcoin is more than enough for them, and once they accumulate more knowledge about this market they may realize investing in bitcoin is by far the best option, however if some of them still want to trade they can do it, but they need to only use a small amount of money, since the majority of those that try to become traders lose the majority of their money in just a few months.

[Lanatsa]

Diversification assets into multiple baskets ideally sounds like picking fruit from many trees but is not as easy and sweet as expected. Some assets are no longer capable of price reversals, some assets are only good if they are hyped, and all of them will pose a greater risk of loss when losing interest in the market. I'm not the kind of person who likes to divide treasures into parts, as you said, it would just be a pile of useless trash.

yeah, diversification isn't all rainbow and adhere to our expectation, most people that over diversify usually are the amateur and beginner who thinks diversifying into more shitcoin means less risk, well the bad news is, that's not true, just packing various shitcoin doesn't magically turn it into blue chip coin.

in my book, diversification only work if I want to invest and mantain risk, but also want to try investing into high risk coin some time, then it works, other than that, just a waste of time since BTC perform better than majority of other coin anyway, no point diversifying. this even more apparent when most of coin also just simply follow BTC price like you can diversify to other 5 top coin and the result more likely will be the same as holding just BTC  .

What if your only asset is bitcoin or any other blue chip coin and we are in a bear market? Why do we keep locking ourselves into the crypto industry and thinking that diversification means investing in a few altcoins? Why don't we divide our capital and invest in assets such as stocks, gold or businesses? Isn't that diversification?

People just follow the cryptocurrency market and say that diversification is useless, while the concept of diversification is most true when we invest in unrelated assets. You put all your assets in the cryptocurrency market and if it crashes, you lose everything. So I wouldn't call it diversification.

The main reason on why people would really be having that consideration on sticking into crypto industry or market rather than on having some considerations into those traditional investments on which you had mentioned it is just because of the possible return that it could give. People would really be always loving to see or choose up into those things on which they could really be able to easily make money in a short period of time and this is why they would really be ending up unto this option because they do really know about the potential gains that they could get. Some might not really not know about those traditional investments or they arent interest or simply they are focusing too much into this space and this is why it is really that out of their options. Well, its their choice but it would really be that impossible that you cant be able to think up well and make out those reconsiderations.

No matter what form or step that you would really be  taking and as long it do talks about other income stream by simply acquiring those different spots because of diversification then this what matter most.
People do just missed it out or simply they do skip because of having no knowledge or simply having no capital? We wont really be able to tell, but as much as possible then this should comes up into
your mind.

[Captain Corporate]

The issue with income diversification is that if you overdo it then you are going to end up with something that will not be all that smart and you are going to end up with some issues. I personally believe that the best thing to do would be just doing it very selective, like be very limited on what you accept. If you diversify it to everything, then you are going to be quite upset about it, but if you are careful then you are going to end up with a much better result. I personally believe that the best way to go with this would be just making sure that bitcoin is in it, and if you really want gold can be in it, and depending on where you are and how much you have, real estate "can" be good, can be terrible too, make sure, but I would say nothing else gets in for me.

[dunfida]

The issue with income diversification is that if you overdo it then you are going to end up with something that will not be all that smart and you are going to end up with some issues. I personally believe that the best thing to do would be just doing it very selective, like be very limited on what you accept. If you diversify it to everything, then you are going to be quite upset about it, but if you are careful then you are going to end up with a much better result. I personally believe that the best way to go with this would be just making sure that bitcoin is in it, and if you really want gold can be in it, and depending on where you are and how much you have, real estate "can" be good, can be terrible too, make sure, but I would say nothing else gets in for me.

Just dont make yourself that being that too desperate then you would really be just that fine but on the moment that you do find yourself you do have that control on what you are trying out to achieve then this is something which is really that recommended. Income diversification is a must considering that we are really that dealing up with struggle specially to those who are really just that earning average.
Diversify as much as you could and not really that dealing with a single source of income on which just like on what everyone is saying on here that it is really that better to have that lots of back up plans
rather than on making yourself that being too confident that you could sustain forever. There would really be those life conditions or situations on which it would really be that needing that financial on which
on the time that your savings has been depleted? For sure you would really be ending up miserable.

This is why it would really be that recommended that you should have those back ups on the time that they will really be experiencing those problems on which of course
you wont really be that struggling if you do have the money that you could really make use on.

[Azizcdra]

It is good to have another source of income like real estate, staking, crypto jobs, mining,  and other legitimate sources of income. If I say that I will force trade now, it can end up in a loss.

I agree, and also don't put all your money in crypto. Some people who initially only had 10,000$ maybe became millionaires in a few weeks, but some millionaires ended up with only 10,000$ left

[dansus021]

Diversification is the best option for investment in my opinion I mean I through a lot back then I just put all my money into crypto like 100% of all net worth is crypto because I felt like crypto is crazy that can turned a dollar into 100 dollar in matter of second that I mean no other investment can be like that. Some people called stock are volatile asset but dude crypto is way way more volatile than stock.

Crypto can make you rich in a second but can turned you broke in a second too. That is why right now I'm trying to Diversification my asset, I'm not rich but I'm trying my best to get passive income and the way to achieve that Im trying to try other instrument like mutual fund, stock, Gold, obligation.

Some people don't believe other instrument but for me as long those can give you profit then why not

[retreat]

Not only for crypto traders, anyone must also have more than one source of income, because in an uncertain era like today we cannot rely on just one income, if possible when we have the opportunity we must be able to find more other sources of income, so when one of our sources of income is disrupted, at least we have other sources of income that we are ready to use to support our lives.
However, if someone is too lazy to find other sources of income, and prefers to maximize what they get now, then they must be able to save, invest, and manage their finances better. So when there is a financial problem or when market conditions are not good, at least they have funds ready to be used for whatever it is.

[FanEagle]

Doesnt matter whether you do get involved in crypto space or not, or simply being a trader or not on which you would really be wanting or needing to have that income diversification on which we do know that
when it comes to this aspect then it would really be always recommended that you should really be having that kind of other source of income to have a good financial condition or state.
It would really be that a common approach to have such aspect on where you would really be needing that multiple income source but the main challenge on here is on how you would really be able to do it?
On the moment that you would really be having such approach on which thinking about multiple income sources then you would be needing up that additional capital and of course that additional risks taking factor
on which on the time that you will really be dealing up with something new then risks management will really be the key or something that must have.

Who doesnt want on getting rich nor being that financially free? Of course we would really be that thriving as much as we can on achieving such state. So it will really be just that depending
on you on how you would gonna do it.

That's true, income diversification is important for everyone, not just crypto traders. That of course includes them too, just not limited to them, anyone who has income from a different few sources, could get richer easier, just relying on your salary and nothing more can't make you live a decent life anymore, a lot of people realized that long ago.

I have a friend who literally bought a warehouse, that was not something I thought I would ever see as a "business" or anything, but he did that because it was cheap and he had the money, he took out a small loan, nothing big, and then rented the warehouse to some company for a small amount. That's an example, do that a dozen times and suddenly you do not have to work anymore, do it a few dozen times and you are rich beyond what you can spend.

This is how people get richer, they do not work for money, they make money work for them instead and if you can do that it means that you are going to end up with a good return without a doubt. I personally believe that the best thing we can do right now would be making sure that we invest into different multiple projects and assets, so that we could have income coming from many different places to us.

[Pandu Geddon]

Not only for crypto traders, anyone must also have more than one source of income, because in an uncertain era like today we cannot rely on just one income, if possible when we have the opportunity we must be able to find more other sources of income, so when one of our sources of income is disrupted, at least we have other sources of income that we are ready to use to support our lives.
However, if someone is too lazy to find other sources of income, and prefers to maximize what they get now, then they must be able to save, invest, and manage their finances better. So when there is a financial problem or when market conditions are not good, at least they have funds ready to be used for whatever it is.

I know there are people who make trading their source of income. even make it a full time job. but I'm sure it's not the only source of income they have.
no matter where they get their other money from, but it is very unreasonable for someone to make trading their only source of income. if the trader has a family to feed, then the market situation will sometimes make him and his family starve.